[THE KOREA TIMES_박은지 변호사] Recent trends in gaming industry regulations

By Park Eun-ji

A few years ago, a panel of celebrities on a TV show was asked to rank Korea’s cultural contents industry exports in terms of sales volume. The categories were movies, music, and electronic games, the last of which turned out to be the clear winner. Panel members expressed great surprise, as they seemed not to believe that video game industry sales could outrank movies and K-pop. This might be indicative of the general population’s perception of the game industry at the time.

However, now in the new era of the Fourth Industrial Revolution, awareness of the size and importance of competitive gaming, including esports, has grown. The Moon Jae-in administration is easing excessive regulations on the game industry as it drives regulatory reforms to spur innovation growth.

Since January 2017, the self-rating system, which was at first applied only to mobile games, has been extended to all platforms, except for adult-oriented or arcade games. Beginning with the appointment of Sony Interactive Entertainment Korea (SIEK) as the first self-rating company in July 2018, some of the problems related to the delays due to the tedious rating process have been resolved. Also, in December 2018, the Korea Fair Trade Commission (KFTC) announced it would raise the monthly limit that adult users could spend on PC-based online games.

However, considering the international trend, the game industry is expected to face a more difficult situation. In 2017, as the World Health Organization (WHO) proceeded with its revision of the International Classification of Diseases (ICD), it announced that players’ game addiction would be classified as a mental illness, the so-called ‘Gaming Disorder’.

The revised edition of the ICD is scheduled for further discussion at the World Health Assembly in May 2019. Upon confirmation of the listing, Gaming Disorder will become an official mental health condition as of January 2022.

Furthermore, it should be noted that the regulation of “winning game items based on random probabilities,” which some overseas countries already began applying to their game industries last year, may affect the game industry in Korea.

In March 2018, the KFTC, signaling its intention to sanction strictly game producers that advertise false probabilities of winning in-game items, imposed the largest-ever administrative fines on certain game producers. This is of no small import, especially for companies whose chief means of making money is selling games that include items that appear to be based on random probability.

Meanwhile, on December 7 last year, the National Assembly of Korea introduced the “Game Industry Promotion Act’ that penalizes proxy game players who act for others in raising play levels and who collect game items using other people’s accounts. This is expected to contribute greatly to fostering a healthier e-sports ecosystem after several game players and producers were troubled by professional proxy gamers.

As can be seen, the forthcoming policies on the game industry are anticipated to be a mixture of stimulation and regulation. In preparation for such policies, game producers, from the early stages of development, are aiming to market their games overseas in order to compete in global markets beyond merely targeting domestic gamers.

Moreover, actors in the gaming markets are trying to create a system where participants’ voluntary restraint, not government-driven regulations, leads the balance of market promotion and user protection.

The game industry is often considered the only privately led Korean industry that succeeded in global markets without government assistance. However, voices of concern on the growth potential of the domestic game industry are increasing with the rise of China to first place in video game exports last year.

In this regard, 2019 is expected to be the turning point for the Korean game industry in the face of critical issues including, but not limited to, regulation of probability-based items and categorization of game addiction as a mental illness.